tv Squawk Box CNBC January 29, 2013 6:00am-9:00am EST
good morning. the s&p 500 snapping its rebound in winning streaks, yahoo! shares higher and the senate finally approving a $50 billion aid package for victims of superstorm sandy. it's tuesday, january 29th, 2012. i think we had a new year. but let's call it 2013. i'm going to go with that. "squawk box" begins right now.
good morning, everybody. i'm becky quick along with joe kernen and andrew ross sorkin. joe, nobody can put anything by you. you're right, it is 2013. our top story this morning, call it a breather or a break, but the winning streak has been snapped after an eight-day run for the s&p 500 giving background. not much, but it is enough to stop the longest run in eight years. the s&p 500 dropping about three points, but the index still remains a hair above 1500 and some people will tell you that's pretty important. the dow finishing lower after bouncing around the flat line all day. the dow standing at this point at 13,833. but the nasdaq showing some signs of life thanks to roadway bound in apple shares. the nasdaq closing at 3154. apple shares up about 2% yesterday. also yesterday on squawk, jpmorgan strategist tom lee made the case for the dow hitting 20,000 in the next couple of years.
>> when we look at multiples, you have to keep in mind mid cycle s&ps are at 13 been we're at 1257. triple yield bonds are trading at almost 11 times. if you put a 17 multiple on 150, i think the s&p peaks around 2400, 2500. >> where will the dow be? >> i think it would be close to 18, 19, 20,000 down. >> okay. >> robert, how about -- >> that's obviously four years away. >> we have another big lineup of market guests starting at the bottom of the hour. kevin ferry, jeff saut, charles champble and james paulsen. and our guest host today is james paubarry sternlicht. >> becky, i can digging the screen right next to you. can we do that every day?
>> sure. >> leading the stocks to watch this morning, it's the first quarter around ceo marissa meyer. yahoo! reported a quarterly profit of 32 cents per share. the company benefited from higher ad sales prices. yahoo! predicted a modest increase in revenue. but the road to revive the company's fortunes will be a long one and its revenue projection coming in a little light. you're going to see some action on that stock today, a little bit of a mixed picture. we have an analyst we'll be talking to about yahoo! in just a bit. >> i think that reflects what's happening, though, right? >> what do you mean? >> it is up. >> it is up, but some people are talking about the projection being slightly up. >> earnings this morning, including reports from pfizer. also, ford international paper and harley davidson and that's just before the bell. the big report after the bell will be from amazon.
so plenty for investors to digest today. and while that's going on, the federal reserve will kick off the first fomc meeting. now that we've got it right here. so i was right. i don't like to -- >> it is 2013. >> i don't like to challenge because i remember something. didn't cathy griffin do something, anderson cooper's -- >> you called it a sardine. i do remember, something happened. >> it takes you until about july to figure out writing the right year. >> on checks? >> yeah. >> it haven't written a check in a wild. >> i have to think long and hard before i write that out. >> it's the first federal meeting of the year. big piece in the journal today. john taylor, not the hedge fund john taylor but the former
appreciatory under secretary. stanford say the says holding back the economy, the federal reserve is holding back the economy. >> steve liesman will be along at 7:30 eastern. i don't think he would buy into that. we will be here with the release of cnbc's exclusive fed survey. and from the better late than never file, the senate has approved the long delayed $50.5 billion aid package for the vikt manies of superstorm sandy. the approval comes three months after the storm ravaged the east coast destroying thousands of homes and is business in new york and connecticut and new jersey. nine republicans joined democrats in voting yes on the measure. now president obama must sign it into law, which he is expected to do. senate leaders held up the aid and for wrangling' over the new rules, filibusters and some pork in there and all kinds of stuff. andrew asked me today -- i love this. is it okay to wear a jacket? it's fine to wear a jacket when
you want to because of -- he goes, look, this shirt needs a jacket. that begs the question, where do you wear a shirt that needs a jacket to cover it up? >> because it's a different look and it gives us something going on there. i get that. >> you're behind the shirt, but you never to cover it up. >> basically, if you have too many checks, it looks like a picnic table. >> it does. >> that's back to the original question, why buy a shirt that looks like a picnic table clothe. >> i'm with him. i have some things that i have to put a sweater over because it's too much. >> you want it to peek out, but not take over. >> it's a team. >> go like this. >> we know he's a little bit of a tease. being here every morning with him, it happens a lot. it happens a lot. and anyway, let's take a look at the markets this morning. we told but that action from yesterday. you did see the dow and the nasdaq down slightly higher.
this morning, you see a few red arrows. at this point, the dow future is down by 9 points. nasdaq down by about 6.5 and s&p down 2. take a look at oil prices this morning. right now, down by 7 cents, but sitting at incredibly high numbers. 96 of.37 for the wti. the ten-year moved above % for the first time in april. it did end up, that yield coming back down slightly. this morning, you can see it sitting right at 9.6%, but a lot of activity and a lot of talk about whether or not we've seen the bottom when it comes to treasury prices and -- or treasury yields and if you're going to see those things continue to push up from here. take a look right now. you see the euro is trading at 1.343. dollar is down against the yen and the pound. and gold prices this morning are indicated up by about $6.50. 1,659.50 an ounce. >> it's now time for the global markets report. let's fly over to see kelly evans in the land of the caviar communist. kelly evans is in london this morning. good morning. >> andrew, good morning.
as the deals go, you're going to love this one. a high profile board room battle is heating up this side of the pond. the rothschild banking dynasty is banked against one of the most powerful families in indonesia for shares of bumi. shares are up about 20% from a year ago. but these since the ipo has fallen sharply. the indonesian focused miner has called an extraordinary general meeting next month to let investors decide whether to take nat rothschild planned board shake up. this goes back to 2010. executives have advised shareholders to vote against all the charges. today, we saw this play out in realtime. nat rothschild said shareholders in this case have little choice but to push for reform. >> nick von schernding is a good man. we hired him as a pr man. however, he is not at all
qualified to be the ceo of a global mining company. and i'm not just saying that because he tried to make himself more well qualified by embell h embellishing his cv last week. it's staggering. i seem to have been the lone voice in trying to deal with the serious issues at hand. >> respond to go that interview, also first on cnbc, the ceo on of bumi responded and said he's confident he will win a vote from shareholders to block the man. the move, their vision for this company is good getting it back on its feet and denies any allegations of embellishing his cv. >> look, i don't want to get into a personal slurring of anybody here. i think the facts speak for themselves. i've had 25 years of financial and operating experience in the career at angelo american both in south africa and at times india. i've worked closely with two chief executives at angelo.
i have no issues with that. the key issue here is that this company is in a total mess today. and that mess was created when nat rothschild brought the structure to the london market. one of the flaws in this transaction that nat rothschild brought to the london market was he gave control of the plc to the backries. that is a problem. we are trying to sort out that mess by removing the backries from the shareholders of this company. i would say to all shareholders, including nat and the backries, it's time for everyone to step back and allow an independent management do the right thing. >> the real question is whether what's best for shareholders has gotten completely lost amid the infighting. that extraordinary general meeting will take place on february 21st. in the meantime, we can expect a lot more back and forth. i'm sure it will come down to shareholders ultimately to
decide who has the better strategic plan for this company which is clearly in need of one at a time no less when miners are under pressure given the cross currents we are seeing in the general economy. on that note with a generally quiet european session, i'll send it back to you guys. >> is this the polite version of ackman and icahn? >> this is the european version. >> there's no cursing? wa do they say over there? >> you can tell nat rothschild is a more fiery character than the ceo whom we spoke with. i wouldn't put it past him, necessarily, but i think these gentlemen are trying to keep it professional. i'm just surprised whether it's the incident you referenced or today, how personal these attacks become. the real risk is what's best for the shareholder in the long run has gotten overlooked. >> kelly evans in london, thank you for that. we'll see you in a little bit. coming up, we're going to search for value in the markets as the dow flirt wes 14,000 and the big question of the day,
should you yahoo!? the search engine beating the street, but is ceo ma ris ya hire making the right moves to get your investment dollars? as we head to a break, here is marissa mayer talking business from davos. >> yahoo! has always been a very friendly company, because of our focus, it's also -- in addition to technology, but our media. it ultimately means that there's an opportunity for partnerships. and that's what we will be focused on. so we work with, for example, apple and google in terms of the operating system. in terms of the social network. they have a strong partnership with facebook. and so we are able to work with some of these players and have a lot of strength in order to really bolster our user experiences that we offer on yahoo! sites. ♪
uk equities dow right now. apple managed to rebound yesterday. i thought one of the most interesting things yesterday was that kentucky raid, that ftc on a -- what did they call it, multi level marketing organization? you saw what happened to the shares of herbalife. >> herbalife. >> i call it bone know. i call it -- >> it's herb greenberg's world.
>> did you know appear sl bigger than exxon mobil again sflp. >> anyway, herballife was down almost 4 points. i don't know what it means if the ftc starts looking into these. >> they've already looked into herbalife several times. the question is whether this whole bill ackman campaign is going to change it. >> friday, we have the billionaire brawl. >> is your back okay? >> it's itchy. >> making me itch. >> it's going zero because of that. monday, some kentucky -- they raid a place in kentucky. it's just weird because he seems to be saying that regulators really need to look again. >> i think what's happening -- what's really happening, the wind the scenes action is ackman and others are lobbying. that's what this is all about. the question is how far that campaign is -- >> how successful it's going to be. >> yeah. >> we really need to know whether there are end users@that just love that -- whatever it
is, the crap that they're pushing. we really need to know whether people swear by it or whether people swear at it and whether all those profits are from recruiting other people. that's the bottom line. >> and we don't know the answer. >> we don't? >> remember, we had the ceo on and he would not say what percentage of the business was for the first year people who come in, they try to sell the stuff and they fail. you need to know that. once you know that, that will answer the ultimate question. >> we might get an answer from our next guest here. let's get to the national forecast from the weather channel's eric fisher. lose weight now, eric, ask me how. do you know anything here? you're gon going the to punt this completely. >> he doesn't need to lose weight. >> i'm sorry, i don't have an answer for you here. >> you don't need to lose weight. you look good. >> thank you. i've been working out. >> because he's not wearing a fricking picnic table clothe. anyway, go ahead. >> this would be brooks brothers
slim cut if anyone is interested in the shirt this morning. >> impressive. >> the next 24 to 48 hours is probably going to be the busiest for weather in the month of january that we've seen. will happen already look at the map here. you've got thunderstorms across iowa, wisconsin and illinois this morning. check the calendar. it's january 29. thunderstorms across michigan, including grand rapids and saginaw. this is the beginning of what's going to be an active day for severe weather. if you step out the door, these aren't forecast highs. these are current temperatures. it's in the mid 60s in missouri and little rock. 65 in jackson. record highs starting to fall out there on the map. all that heat, humidity, this will lead to severe thunderstorms in a widespread outbreak of severe weather is in the forecast today from central illinois right on back into dallas and houston. a line of storms will start to develop and rate race off to the east tonight for that more crimson color, including nashville and down towards the gulf coast. that's for tonight as that line
marchs off towards the east. we could see several tornados today, maybe even strong tornados developing. our tore conhere t weather channel, four out of ten around the arklatex and around alabama and mississippi as we head into the overnight. they are more deadly during the nighttime hours because most of us aasleep. tomorrow, the line moves through atlanta and charlotte, richmond, maybe even washington, d.c. after ice over the weekend. we are into severe thunderstorms. and it will pour rain here around chicago, detroit, indianapolis, we could see 3 to 5 inches of rainfall and flooding in this part of the country. the ground froze last week because it was so cold. now that ground is like concrete. the water falls off. in terms of the heat, just a sample of some cities. wisconsin in the 50s today. iowa in the 50s. some cities have gone to the low 60s in iowa this morning. down across florida, we're in the 80s. corpus christi could hit a high of 92 degrees this afternoon. the record is 86. guys, it would just shatter the
old record high. >> eric, i had a friend who went to chicago and what was the -- who was the low in chicago and where is it now? it's like -- what's the -- i mean, it's a huge spread, isn't there, like unheard of. >> it is. chicago actually just got to 59, which ties the record high already this morning. >> and where was it three days ago? >> we had a high of i think 10 was the lowest high temperature that we saw. >> that's great. i'm starting to be a believer in climate change because i'm seeing the weather change almost every day. i'm just noticing that, the weather does change. so climate change is real. >> this is unusual and climate change is real because the climate is always changing. >> yeah, exactly! >> the question is what -- >> you don't like the weather, wait a minute and it changes. i really appreciate fully tha the weather does change all along. you've been right, andrew. you call someone a murcurial they like the weather because
the weather changes so much. weather is known to change. that's why i don't know if that's really that profound an idea. >> mercury? >> it is. it is. and also to the element itself, which is very beautiful. you know, that mercury will go and -- i mean, you've seen terminator two, right? >> learn something new every day here on "squawk box." >> dow. >> yahoo!'s fourth quarter results beating the profits of 32 cents, 4 cents above estimates. joining us from new york, anthony did you clementi from barclay's. he's their internet and media analyst. strong results. the question is, how much credit are we going to give marissa mayer for this quarter? this was her first. >> her first. >> how much of this is built in before she ever got there? >> i give her partial credit for getting new management in place. the new cf oo may have done some things that helped cost cutting
and near term monitorzation of search. the quarter was characterized by margins beating, the buyback accelerating and the return of capital a big part of this story. and guidance was a little weaker than analyst thoughts. >> some people thought the revenue projection was a little light. >> right. light in your mind, too? >> yeah, right particularly on display. so display revenues driven by users and engagement. i think one of the bear cases on yahoo! will be that the number of impressions or the number of ads sold, like the tv ratings in your guys' business is down. number of ads sold was down 10% in the quarter. what is marissa mayer going to do to rejuvenate and invigorate user engagements? she has new products, probably an aggressive strategy. new product announcements accelerate throughout the year, mail, flicker, and those are the things that we need to see work. that's where you're going to get this escape philosophy and the stock to the upside if she can
create products. >> anthony, the stock for $20.90, what's your target on this thing? >> 22. >> so not much room to move, then? >> no. but i think it's such a low multiple. i think it is in some ways a wait and see story because of its display revenue question. if they can get it to work, up theside is much, much greater. >> is this an issue -- on the display side, is this an issue of market share? and i'm looking, back in 2009, yahoo! led the market of all digital ad revenue when it came to display ads. is this an issue of if they can get back a point or two, they win the game? >> it is. and i think it's -- you know, there are new entrants. you look at facebook which you consider a big growing part of the market. and you look at the yahoo! brands. they've come down. so yes, it's a question of regaining market share. >> do you want to -- go ahead. do you want to see her make a big acquisition?
>> not really. i think that what she's been doing, at least recently, is acquiring mobile app developers. they need to do a good job of mobile. yahoo! has to be an app that when i'm on my iphone, i want to download my app. whether it's an umbrella app, that incorporates news, traffic, weather, i think they need to be working on mobile and marissa talks about her products as being cross platform, so desktop and mobile platforms that capture the user and engagement. we'll see. >> what piece of this gives you hope? beyond that there's a user engagement issue, is there a page jewish, is there something that says to you that they're picking up users as opposed to losing them? >> the one then in the quarter that surprised me was search. so search accelerated in terms of number of clicks. and to me, it's a positive indicator that they could really turn the dial on search monetization. there were some things they were able to do. search is up 14%, okay? and then the other thing that
gives me hope on the stock, andrew, is that you've got, really, an attractive valuation when you consider the value of ali babba which is the largest platform in asia. that help us helped earnings. yahoo! owns about 24% of ali babba. the it hadden assets give you valuation support and comfort in owning this stock. its display takes some time, at least you've got those assets. >> i remember we spoke to jack mah about two weeks ago when he was announcing stepping down and we asked him about the ipo. he said an ipo on ali babba was still a year or two away. what is your estimate? and what does that mean in terms of creating some of this value for yahoo!? >> yeah, i'm not sure. we don't know. we don't know the timing of that potential process. but, you know, the fact that yoo-hoo is able to do very important things last year, which was monetize about half
its position in alibabbi is i think an encouraging indication. it actually happened. it pulled that cash out of china and they were able to -- in the quarter, they brought back a billion and a half of stock which is quite surprising. so, i mean, marissa, it's possible her and her team could reyou've night the products while returning capital to shareholders. and any stock where you have a good fundamental story, an attractive valuation at giving stock back, that stock could work. i know our target is only 22, but our upside chance is much, much higher. >> anthony, we appreciate your perspective this morning. >> thanks a lot. have a good week. >> thank you. when we come back, the bulls get tripped up, but not by much. is there still value for investors? we'll go exploring after this. sxoo coming up at the top of the
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in the headlines this morning, federal reserve policymakers begin a two-day meeting today. they do that on tuesdays. i guess tuesday and wednesday typically. the fomc, the latest policy statement will come out tomorrow afternoon. and it should be one to watch. investors are going to be watching for any signs of a change in stratea strategy. the latest assessment of the housing market will be out today. the case-shiller report is due at 9:00 eastern and the forecast is for it to show a 5.5% increase in home prices for november compared to last year. and goldman sachs has sold more of its stake in china's biggest lender. dow jones reports that goldman sold about 1.4 billion shares in industrial and commercial bank of china for about $1 billion. it's the biggest share sale in asia so far this year. >> let's take a look at the markets this morning. you will see a couple of red arrows. this is after the markets gave back a little bit of ground yesterday. not much, but it was enough to
end the longest winning streak we've seen in eight years. you can see right now the dow futures are down by close to 15 points. s&p is off by less than three points and the nasdaq down by just over seven points. that was the first time in eight days that we've seen a down day for the s&p and, again, that is breaking the longest winning streak in eight years. the s&p close above 800 and that is a key level. also, take a look at what is happening in europe right now. similar losses there. things are modestly looking a little lower. in france, the cac is down by about 15 points. in germany, the dak is off by 26 points. in asia overnight, you'll see the nikkei was higher by about 0.4%. the shanghai composite was off by just over .5%. oil prices this morning are up by a few krentsdz. oh, they actually turned around. down by about 6 cents to 96.38. and the ten-year note, yesterday during the trading session moved
above 2% for the yield for the first time since april. it closed lower below that. that fed meeting will be important for determining the direction of where the yield heads from here. the dollar is weaker against the euro today. actually wiebts up against the euro at 1.2448. gold prices up are by about $6 the last time we worked. at this point, up to $1,660 now. as joe mentioned, that fed meeting and the jobs report at the end of the week gives investors a lot to think about. joining us from chicago is kevin ferry at cronus futures management. also jeff sow. kevin, we ended lower yesterday, but the s&p was still above 1500. where does that leave us in terms of which way the momentum is headed? >> good morning. i would say what we call the point of control of futures is just below where we're trading right now.
watch 1489. and so if you move below there, we call that the point of control which is what you'll see people who are long get more nervous. >> you said 1489? >> 1489 in the future if that breaks this morning. and the big story is what you're touching on with the ten-year note. people have come into the year with a heavy buy i can't tellace to sell bonds. and i think what you ran into yesterday after the good information as the market is doing better since then, back down to 195, is that finance sg extremely cheap this year. and so the idea that you can just come in here willy-nilly and short them is incorrect. and so it's going to be a very difficult process. and the fess forces people into the futures market, open interest and volume is up in the futures contracts for bonds. but the fed is going to own nearly 40% of the delivery basket into that contract. so it's still going to be a sketchy process and it's very
early on in the game. >> jeff, it may not be easy to go short on bonds right now, but where would you be telling people to put their money, into bonds or stocks? >> into the bonds, absolutely. it started a couple weeks ago when flows into equity central mutual funds crossed above outflows of fixed income. i think that's a building flow over the next three years and i think stocks are the place to be. i think they're relatively cheap. >> do you have to be choosey in this situation or do you think all will be lifted and you can basically look at the indices? >> i think that in the very, very short-term, becky, that you have like 93% of s&p 500 stocks as of last friday above their 50-day moving averages. so the markets were very overbought in the short run. i think you could see a bullback into the overhead -- excuse me, it used to be overhead resistance. it's now a support zone at around the 1475 area.
but i think we may be involved with an upside run like you saw between '06 and into february of '07 where the equity markets, the s&p went up about 18% and you never had more than a 20 to 30-point pullback in the s&p during that nearly year-long run. >> that's not an argument for waiting for the pullback. we've had some guests come on and said wait until it pulls back. you would be telling people to buy no matter what? >> yeah. i have not been one of those folks. we've been fairly constructive since the november lows and i think there's is still a 25% possibility we're in a secular bull market and nobody believes it the. >> kevin, what are you most looking for from the fed with this announcement that they'll give us tomorrow at 2:15? >> i want to see more vocalzation. for the first time, what we've seen this year is the term structure of rates is giving the fed some feedback where they had been mitigating all that with their activities. so i think that they can vocalize how they feel about how things have widened over the
start of the year and in particular, how they feel about what's going on in europe. because the european rate structure, what we call euribor, has been a factor here at things got really out of control here and it hasn't been covered very much. >> jeff, yesterday we heard from caterpillar. and the outlook was much more cautious outlook than some people had been anticipating. they gave wide guidance for the year for the earnings. $7 to $9 a share. and the ceo told us on "squawk box" that when he looks at things it's hard to figure out how the second half of the year is going to shake out. how can you be more confident than he is base odd what he's saying? >> well, if you listen to the message of the market, i mean, the transportation average, which is very economically sensitive has popped out about four weeks ago to new all-time highs, which was one half of the down theory buy signal. you've got the dow jones
industrial average within all-time highs. if you look at the housing recovery, we're right in the middle of it down here in st. pete, clear water, tampa. they're building spec homes again, inventories are down, pricing is up. if you look at what's going on in the automobile sector, very strong numbers there. i think the economy is going to strengthen as you get into the back half of the year. >> kevin, do you feel comfortable with that? >> not so much. i mean, you know, i think it's probably ham on rye kind of what we're seeing. here is one thing that we're watching. the payroll tax increase didn't bother us when the price of gasoline was down. but over the past few weeks, we've seen the price of gas go up by anywhere from 30 to -- 25 to 35 cents per gallon. that really puts an impact on $20 a week for 50,000 in income. that price in gasoline really was going to make double hit behind the increase in payroll taxes. >> that is an interesting point. i hadn't really thought about
that. when it comes to the jobs number on friday, kevin, tell me what you think the market is looking for? what would be really good news and what would be look out? >> they want it big. the guys are going to probably pull bids out and put up some shorts going into it. i'd watch for an air pocket down. my own opinion is i think you'll see a number finally over 250. we're overdue for that number. and -- >> the dawn of february 1st? >> they don't have time to cook the books by february 1st on that, do they? huh? >> it's friday. >> they're supposed to be good at it, i don't know. >> well, they are -- >> i think we're overdue -- go ahead. >> there have been other times where i guess -- >> when they put it off. >> they put it off a week when it's that close. >> absolutely. it's coming fast. >> he got relengthed. they don't care. they'll just give the real numbers probably this time. >> jeff, how about you? what are you looking for with that somebody? >> i think the market is due for
a rest or a pullback here. i don't think it makes much different what the number is. i think the market is in a strong uptrend here. i think it will shake it off and is trade higher. >> did you bring a jacket today, ferry? >> no. it's 60 degrees. you've got to love that. >> you have nothing to cover 245 shirt up. andrew -- >> put andrew and kevin this double boxes. >> no, no! people are eating. oh, my god. >> there you go. >> so you think -- all right. >> you know, to each his own. to each his own, kevin. so you and andrew, a couple of peas in a pod. >> i wonder if we can go guest host to the fashion police with joan rivers. that's what i think is coming up here. >> i think we'll pass with flying colors, andrew. >> okay. thank you, kevin. >> i have no idea what he's talking about. the fashion police with joan rivers? >> you should know this. >> is e!
one of our properties? >> yes. >> watch it all the time. watch it all the time. >> and i think that they should have you on as a guest host. >> i'd rather ask her for her plastic surgeon because he has to be -- i don't know. he probably doesn't have time for me. but anyway -- >> well -- >> if you have comments of questions about anything you see here on squawk, shoot us an e-mail, email@example.com. still ahead, getting ready for the big game. will it include chicken wings? you won't believe this next story we have coming up. it gives a new meaning to hot wings. as we head to a break, check out this hot commodity. crude prices at three-month highs. [ male announcer ] you've climbed a few mountains during your time.
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welcome back. uk equities futures down. earnings came out from drugmaker eli lilly a couple of minutes ago. they came out with 7 cents above estimates and revenue was above consensus. ceo john lickliter says the company was able to off set a revenue decline from the expiration of xyprexa with the growth of our products. and the cfo will join us in the next hour with more on those quarter wily numbers the. direct from the police blot he, two georgia men were arrested last week for allegedly stealing $65,000 worth of cold chicken wings trt cold storage business where they work. here is what happened. they pulled a rental truck up to the loading dock, make off with
ten pallets of tyson wings. one bag sells for about $12.50. there's a wing shortage nationwide. did you know that the head of a super bowl, farmers producing fewer chickens last year as the severe drought in the u.s. drove up feed costs. police say this sounds like a well timed heist towards super bowl sunday. i wonder whether those wings are being sold. >> where do you resell frozen wings? >> yeah. >> how many is it? 65,0$65,000 is how much some of >> 12.50 -- is it a pound? >> i forget what they said. >> does that fit in a truck? >> apparently they had a truck that went right up to the back of the thing. they have a frozen or refrigerated truck. >> the one you sense, would do you meet? >> hey, buddy, do you want to buy some wings? >> where is it, do you have some stuff? >> from under the trench coat.
>> who were those guys up in canada who were stealing maple syrup? they were taking maple syrup and claiming it was -- >> we have howard dean and judd gregg on, battle of the vermont/new hampshire. >> this could have been in chairs, this story that we just had. we talked about chicken wings. we're going to talk about another food product, wieners. i'm going to mention wieners coming up. the story is fit for the chairs, plus about weaners, weaners rising. the fed kicking off the first fomc meeting and steve liesman will kick off the release of the exclusive cnbc fed survey. that's coming up and you can look forward to that in the next hour. and what's on the road ahead for investors? quarterly results are due at the top of the hour for ford. and phil lebeau will be on the case. "squawk box" comes back right after this. ♪
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weiner, who was, i don't know, he was a congressman, the most liberal guy, the most pious, smug, sanctimonious guy around. meanwhile he's mailing pictures of the aforesaid weiner to try to do it to a couple of people, a couple young ladies following him but he sent it to everybody. >> he did that also on twitter. >> also on twitter. >> which is adding to the $9 billion. >> 11 hours ago on "the new york post" tweeted that he's testing the water for another run, and that their headline in "the new york post" are praying that weiner does get back in to something. and so then today, even the "daily news," which is not known to be a headline writer, weiner rises in phone polls. so apparently, there are people well connected, manhattan -- or democrats that got a call about who would you vote for in a scott springer, the manhattan borough presidents have anthony
weiner, and for controller and the polls are expensive, and you don't -- your name doesn't appear in a poll unless you have paid someone to do the poll. so apparently he's got three -- over $3 million left. he can't keep buying, i don't know, what kind of body oil would you rub all over yourself if you were looking in the mirror. he can't spend that whole $3 million on, you know -- >> looking in the mirror like he was? >> like he was, yeah. >> you see some of those pictures? >> yeah, i did see them. he likes pictures, and he likes to send pictures. >> he cannot -- don't! don't! anthony, no. no. i'm telling you. don't. >> he wouldn't be the first to turn around. >> no, no, no, no, no. we don't, we don't. no. if he's thinking about it, he blew it. this fast track dude, and -- but. >> transition? >> that's your -- >> you've got some serious.
>> if you can get from anthony weiner to mary jo white you've got a shot here. i wrote a column today in the paper -- >> the column, i didn't get a chance to talk to you guys about it last week about how everybody thinks she's this great prosecutor and she was a former great prosecutor. except what has she been doing for the past decade? working for every banker and their brother getting paid probably somewhere between $4 million and $5 million a year. her husband works at core vath, does the exact same thing. she's defending jpmorgan and john mack, you name the person, and this is the person that the president is saying is supposed to be the new sheriff. >> she's a lawyer. >> she's a lawyer. >> lawyers, everybody deserves to be well represented. >> everybody deserves to be well represented. >> you don't look at the persons and morally judge whether you should represent them. >> i absolutely -- >> raises the question, is she going to be as tough as was the initial read which came in, which is she was a former
criminal lawyer, or a criminal prosecutor, who was going to be looking at white collar crime -- >> that she was not -- >> and most of her -- most of the cases that she brought as a former prosecutor were not, actually, corporate cases, not banking cases. they were -- she did john gotti. she did the world trade center in 1993. so, she wasn't taking on banking cases. and between her and her husband, they have made a fine art of going through the -- he also did. he worked at the s.e.c., started 2006, left right after the bank bailout. >> the one thing i'll say with that you want somebody in the s.e.c. who understands how all these things work. >> putting the fox in the hen house can be valuable. >> you want to make sure they understand how these things work. so i would rather see that than somebody who just came from a criminal -- >> she doesn't need to, you know, earn her chops here and then go to private -- >> my goal, my hope is that she
actually is a great head of the s.e.c. also by the way, she doesn't have any expertise on the other side of the job. not just an enforcement job. they have a deputy who does that. >> we complain when people have only had public -- >> and we say they have no experience. >> right. >> and they've gone back and forth. >> it's a conundrum. but it's an interesting point. >> and i -- we haven't spoken about, you know, the whole geithner thing where a lot of people slipped through the cracks and bailed out of firms and got huge compensations. crazy about that. you're going to -- like a joker, or a court jester. >> yeah. >> i'm going to mention very quickly the nrf, the national retail federation is out with its guess for where retail sales are going to come in. they're looking at 3.4% growth which is a little less than they were expecting.
kevin barry just made some good points, it's not just the payroll tax that comes back in, but also higher gas prices and we are going to be keeping an eye on oil prices today, because if that gas does act as a secondary tax, great point on something we should be watching. >> run on checkered shirts today. huge, same-store comps. >> you're going to be wearing -- >> we're going to get you one. >> when we come back, we'll get ford results. coming up at the top of the hour. and making his way to the "squawk" set, a power player in private equity, barry sternlicht will be our guest host for the rest of the program. >> look at this gentleman. >> good morning, barry. >> "squawk box" will be right back.
putting the skids on the winning streak. stocks taking a breather. but what could investors be in for today? get the tools you need before the trade. finding profits. starwood capital ceo barry sternlicht on where he's placing his bets in this recovery. he's our guest host this morning. >> plus earnings alert. ford and eli lilly ready to report this hour. we have the numbers and the instant analysis as the second hour of "squawk box" begins right now. good morning, everybody, and welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. we've been watching the futures this morning. you can see a few red arrows. just a modest decline. the dow futures down by about 14 points. s&p futures off by just over 3. let's get to your morning headlines. yahoo! reporting better than expected profit in its first full quarter under ceo marissa
mayer. yahoo! earning 32 cents a share, four cents better than estimates. its full-year revenue projection is also above consensus they mayer says there's still much work to be done. congress has passed a $50.5 billion aid bill for victims of superstorm sandy. president obama says that he will sign the measure as soon as it comes to his desk. that senate passed that measure 62-36 vote and the house had passed it earlier this month. and a judge is set to rule today on approval for bp's plea deal involving the 2010 gulf of mexico oil spill. under the tentative deal, bp would plead guilty to manslaughter and other charges and pay $4 billion in criminal penalties. and we also have earnings that are coming out today. andrew, i think we've got some that are just hitting. >> we do have breaking news. ford earnings just hitting the wires. and phil lebeau has got the numbers. >> andrew, a big beat by ford coming in at 31 cents a share. that's a profit of 1.68 billion in the fourth quarter. that compares with the street expecting a profit of 25 cents a
share. and you can see a big driver here coming on the revenue side, primarily in north america. revenue coming in at 36.5 billion. that compares with the street estimate of 33 billion. so $3 billion better. and then when you look at where the change is in terms of the profit in north america in the fourth quarter ford earned $1.87 billion in the fourth quarter compared with $889 million a year ago. what was driving that? pricing. 400 million in gain in the fourth quarter compared to a year ago. volume 200 million. a lot of that comes with a mix as we rotate towards trucks. and finally they've eliminated some of the costs of ratification for the uaw contract. that's about another 200 million. so the bottom line is this, ford beating the street earning 31 cents per share versus the estimate of 25 with revenue $3 billion stronger we're going to talk with cfo george schenks in a few minutes and have more for you guys in terms of what this means for ford and more importantly, here's a tease for you, they are guiding lower for europe.
still expecting bad problems over there this year. back to you. >> okay, thanks, phil. joe, i think you've been looking at some of the pfizer numbers? >> i have 47 cents compares to an estimate of 44 cents. and for the full year the company sees $1.50 to $1.65 but that doesn't compare. that's probably not -- that's not an adjusted number. 2.20 to 2.30 is the adjusted number. and that is versus expectations at $2.29. so the high end range, the 2.30 would be above where the street is. revenue is now seen at 56.2. to 5.2 billion. and i got 58.3 on the screen, so that brackets it, as well. pfizer has, bolstered by a pretty good yield, the stock has done a little bit better in recent years. back to almost $200 billion in
market cap. the yield 3.6%. and as you can see the stock is indicated up a little bit on this news. i've got a 26.95 bid at a 27.25 ask. and the high for the stock in the last 52 weeks is $27.30. so it's pushing up close very near a new high. it's had to deal, obviously, in recent years. had some -- >> lipitor. >> the lipitor expiration. and relatively new ceo. remember kinder, he was a lawyer, i think, wasn't he, and he was -- made sense for him for awhile to be there, jeff. but as they had all those patent issues, but now ian -- >> ian reed. >> who i know personally, and i think they thought he would be maybe not long-term, but looks pretty long-term this point with how well things have been going at pfizer. the rally was put on hold yesterday as investors get ready for a fed policy decision
tomorrow, a jobs report. i can't, i don't know, i'm not ready on february 1st. but they don't care. they're going to do it anyway. we're going to get employment numbers. we heard from lpl financials jeff kleintop yesterday explaining why investors need to listen to what the fed has to say. and whether it will trigger a rotation from bonds to stocks. >> this is all about don't bite the fed. we've got a meet being on wednesday, with the fed, the last statement they released was pretty upbeat, talked about improving manufacturing, a lot of different things. they could cite improving jobless claims. certainly moved a lot. a positive tone in the first paragraph of that statement from the fed on wednesday could send markets lower thinking that we're close to the end of, if not the end of qe-3, at least -- >> the markets rally when the fed -- >> our guest host today is barry sternlicht, chairman and ceo of the starwood capital group. he's also delivering a -- delivering alpha conference guest speaker and charles campbell is executive director at mkm partners.
barry's going to be with us for a couple hours. so i'll start with you, charles. are you a believer in the recent action that we've seen in the equity markets, and do you think it's going to continue, or has it already gone too far? >> good morning, joe. thanks for having me. i am a believer in the equity action. and here's why. economic conditions in the united states and elsewhere in emerging markets, specifically china, are not only stable but continue to improve. the forward moving average on initial claims is at a low not seen since march 2008. the ten-year treasury hit a 2% yield yesterday and that's a good sign for investors, not a bad sign. if it were there for the wrong reasons, higher cost pressures, higher inflation, stagflation, that would be a concern. but that's not the issue here. the issue here is treasury yields are moving higher because of good economic data and that's consistent with the market moving higher. i mean if you look back in the 1980s, the average ten-year treasury yielded about 10.6%. the market was up about 17% in and change. in the 1990s, the ten-year
treasury yielded about 6.5%, 6.6%. the market was up 18% per year. all right? so higher rate environments don't necessarily mean, or not mutually exclusive of positive and constructive equity market returns. >> charles, i want to ask barry the same question after i ask you, but i would -- give me a number on where you think it would hurt? because i could see, i could see all the way up to 4.5% being construed as a positive. which is still such a low historical number for a ten-year, for whatever, i could see where that would help savers, it would help, you know, the return on some pension plans, and it would indicate economic growth much better than we have right now. it's something that japan wishes they had for the past 20 years, because it would at least indicate some economic activity. i can't even imagine it would be a headwind all the way up to 4.5% or 5% for equities. i don't know about the mortgage market. what do you think, charles? >> it's not just the absolute level, joe. >> but years from now, two, three years. we're going to get back there eventually, right?
>> eventually i think we will. and i think if the path is a controlled one, and not a sell-off in uncontrolled faction just as in the texas mafx markee dollar does not sell off and appreciate in an uncontrolled way, a capitulation type of pattern i think markets will be able to digest that and accommodate that and understand that and not bring fear back into the market. >> as a real estate guy, how much do you love low rates? you're okay at 4.5? >> good morning, joe. >> but, slowly, wouldn't it indicate some good things if we got it back to 4% or so eventually? >> it depends why rates went up. >> well, you know why they'd go up, because things improve. and all that the -- >> i mean -- >> the stress, and the -- >> kind of inflation that you want. and if rates are responding to that, that would be good. that doesn't seem likely. commodity inflation is the inflation we're all worried about. but not that likely, either, because, oil is in surplus condition, so, it's kind of interesting. if you don't have inflation, you still get rising interest rates.
>> you just love this money at zero percent, don't you? you're going all over the place. it's tough to beat as a real estate -- >> goldilocks. >> but it's tough for you to really say with a straight face you don't love not paying interest on the money you've borrowed. >> we've never seen spreads on yields. it's truly astonishing. this is a goldilocks period for real estate. it would, it's interesting, if he's right, and rates continue to move up, you'll see a rotation out of yield stocks like reits, which are parked. a lot of people parked capital in them thinking that these dividends are more attractive than anything else. they understand an office building or shopping center mall, may not understand technology. they got burnt by apple but they understand the basic, core, don't worry about the chinese competition when you're in an apartment. but if rates move up, i mean, i think you'll see capital flow out of the reits. i don't see that likely. i don't see rates moving much. i think 2%, 2.5% is no big deal. >> would you be rotating out of the reits right now?
>> no. we'll see what this is. if this really is this great rotation we can talk about. moving to equities. looks like we're moving to equities out of debt. but -- >> two to 2.5% as a yield on the ten year doesn't bother you, what does? >> most of us don't fans off the ten year. we're just closing on a large building down in the southeast we are buying and we are financing it ten years but we're going to hold it only five. most of us look at the five year. it used to be that way. none of our holding periods are that long. today you think when you buy an office building like in the city like we're buying, it's well leased. we think it was a five year hold, the debt we put in place today may be more valuable than the asset if it's consumable. we're going to borrow 70% at 3.8% fixed for ten years. so i mean that's pretty attractive. and you can get -- you can borrow sub-three. so, i mean it's pretty attractive. you've never seen this gap between yields, maybe 6%, 7%,
and financing costs. you used to have to go to japan to see this. >> right. >> that's concerning here. >> well, we look a little like japan, don't we? chasing them on the debt balance. >> given how attractive all this is for guys like you. >> it's good. >> but it's still been, you know, it's still been a little bit slow, a little bit tepid. >> no, i like this. >> i know i mean but those whatever held it back a little that's going to go away pretty soon, too, don't you think, and maybe we'll really see the -- you'll wish for these days ten years from now and look back on 2013 as like the gre for real estate maybe, right? >> yeah. i mean, this is as good a period of time i think i said this last time i was on -- >> and credit, the banks have loosened up? >> so why is it a good time? you can buy assets below replacement costs still. you can finance them with positive leverage, the cost of borrowing is much less than the yield on the property so you can pay -- like you'll get on this office building better than a 10% current yield. the junk bond moving six and i have no control of the finance ahead of me. so i can finance assets and get
very positive cash flow yesterdays today, and private investors can leverage more than a public reit and we've been working on some deals that we've bought from reits recently. >> charles what are we going to see on friday and what will the fed say tomorrow afternoon? >> i think the fed will be close to a nonevent on a fed day. friday, ekt pecsations because of what's happened to initial claims have moved up. about ten days ago the market was expecting about 150,000 on payrolls. it's moved up to 165,000. on thursday if we get a low initial claims number, below 340 let's say i think expectations will move again higher with a whisper even higher, maybe in the 185 range. >> all right. sometimes we -- when someone's talking and we need to go to a break we start with a nice, slow, music, but when they've already picked some crappy song like this and you wonder what are they doing when the guy's talking and they play that? anyway, charles, thank you.
thank you. greco, your taste is -- anyway. barry, getting with the program here. >> trying to enjoy it. hold on a second. >> i don't. >> anyway, if you have any comments or questions about anything you hear at "squawk" this morning, if you want to suggest something for our play list, please feel free. e-mail us at firstname.lastname@example.org. or follow us on twitter. we'll try to look for your requests there, too. unnext, eli lilly cfo derica rice who will be joining us to talk quarterly results and the profit pipeline. and later brent trading close to a three-month high because of some recent economic optimism. we'll talk oil, the dollar, equities, all coming up in today's trade being block, stick around.
lines. joining us right now to talk more about the numbers is eli lilly's cfo derica rice. derica, good morning to you. great to see you. >> good morning, becky. >> you know, we looked at these numbers, 85 on an adjusted basis versus the 79 cents that the street was expecting. i know you all have been doing a lot of things to deal with zyprexa going off patent. >> we had a strong finish to the year and in the quarter, our revenue declined 1% in the fourth quarter so we almost offset completely the impact of the loss of zyprexa. we've been talking about three key elements for us in terms of our strategy to deal with these patent expirations. driving growth, advancing our pipeline, and really cutting costs. so in terms of growth we had some key brands like cynbalta, which grew. we had japan where we had 14% growth and we're looking at double the size of those
businesses. that's been able to help offset the impact or mute the impact, and that's what drove the 85 cents or 3.39 for the year. >> we have people waiting for updates on other drugs, including one for alzheimer's. what can you tell us about that? >> we're very encouraged by the pipeline today, as you know. we stand with 13 molecules in late-stage testing. we have obviously sold our drug for alzheimer's. you're aware that last year we had the readout of two clinical trials. in both of those trials we did not meet the clinical end points however we did see a sub seth of the population in the mild alzheimer's patients where we did see a 34% reduction in the decline of cognitive function. so we feel very encouraged. we do look to start another trial, phase three trial by the third quarter of this year and look to hopefully submit that later sometime in the future. >> derica, there's a big piece in "the new york times." you probably saw it today, on
how the biotech industry is battling some of the stuff that's in obama care about generic competition for biologics. and i'm just wondering what, you know, eli lilly is a major pharmaceutical company. how many of those new products that you're talking about are biotech derived products? >> if you look at our total portfolio, joe, about half of our portfolio is biotech or biologics. if you look at those 13 assets that we have in phase three development, about eight of those are biologics. of which we hope to submit at least 5 of those 13 for regulatory submission this year in the u.s. >> what's the right balance for you in the way you do lobbying, because i think about how much money is saved from this new technology, these new drugs, these new biotech drugs. it's phenomenal and that's where a lot of the great life-saving, and, you know, a lot of the technology -- a lot of the advances have come from that. so you want to get reimbursed for spending a lot of money to develop them. but then again, we all have this
problem with keeping health care costs down and obama care wants generic competition for biologics. what's the right road to take there? >> you know, joe, we've been in this industry for over 135 years. for us, we've taken a focus and we pursue both small molecule as well as bioological routes to address some of the most oppressing diseases out there. if you take alzheimer's, we have the biologic but we have a base inhibitor in phase two -- >> would you pay a lobbyist, would you get lobbyists for eli lilly to try to make it that you don't have to have generic competition for biologics, is that something eli lilly would do, or do you go along with it? >> well, remember, in the affordable care act we did get an extension in terms of data protection, as we should be, to at least 12 years. we believe that's very important for us to have a reasonable period to generate return on
investment that we make in r&d. we still are the industry that invests the most in r&d, research and development, in this country. we from a policy standpoint we're looking for three things. one is we still want an environment and policies that support medical innovation. two, we want to also make sure that we have policies that support the improvement of the quality of health care in this country. and third, we also want policies that support the competitiveness of u.s. businesses. if we're able to generate policies that engender that and foster that kind of general we think we can have a very conducive pharmaceutical industry and biotech industry in this country. >> i have a question for you. this is a layman's question. are you finding, what's the split of revenue for domestic versus international and are you growing faster domestically or internationally and in the international markets you face a lot of regulatory pressure that you don't that's different than what you see here? that's three questions in one. >> today our business is split
about 50/50. half the business in the u.s., and half outside the u.s. from a regulatory standpoint we've seen a harmonization between the u.s. and europe. obviously in some of the more developed markets like china, those regulatory environments are a little bit behind what we've seen in the western world. we've seen japan here in the last five years begin to harmonize with the western world. so we believe over time we'll see a global harmonization, but for us, it's really about medical innovation. if you can bring forth those molecules that are truly differentiated from what's out there today in terms of the standard of care then you can get through the regulatory hurdles and that's what we're counting on for those 13 molecules that we had in the late stages -- >> are you growing faster here or offshore? >> today if you include the impact of our patent expiree for zyprexa which is primarily affecting the u.s. as well as europe, we're growing faster outside the u.s. we expect that to dissipate in the fourth quarter. we're looking to return the growth in the u.s. along with outside the u.s. here in 2013. >> derica, want to thank you very much for joining us. >> thank you.
>> all right. still to come this morning the rally put on hold for at least a day, and the fed meeting is now focus for investors looking for a signs as to when operation fed all the things they do may end. we're going to find out if there's more upside or now is the time to take money off the table in a couple minutes. and it's super bowl week. that this week, too? we preview the game and talk about the business of football with green bay packers ceo mark murphy. stay tuned. at 1:45, the aflac duck was brought in with multiple lacerations to the wing and a fractured beak. surgery was successful, but he will be in a cast until it is fully healed, possibly several months. so, if the duck isn't able to work, how will he pay for his living expenses? aflac. like his rent and car payments? aflac. what about gas and groceries?
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welcome back to "squawk box," everybody. futures are indicated a little bit lower, despite the fact that pfizer is trading higher after that company came out with earnings. dow futures down by about 13 points below fair value. also check out the ten year note after briefly popping above 2% yesterday the yield right now sitting at 1.954%. and hostess continues to sell some of its iconic brands. we've been talking a lot about that. the company has its so-called bidders for its drake snack cakes. mcafee foods is bids for drakes which includes ring dings and yodels. when we come back, ford's cfo on the company's latest results. phil lebeau has his comments ahead of the company's conference call. "squawk box" will be right back after a quick break. when i'm trading, i'm totally focused. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 and the streetsmart edge trading platform from charles schwab... tdd#: 1-800-345-2550 gives me tools that help me find opportunities more easily.
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strategy. also, we get a fresh lead on the housing market. that's due out at 9:00 eastern time today. the november case shiller report is expected to show a 5.5% increase in home prices compared to a year earlier. and also this morning, we'll get the conference board's latest consumer confidence index. that's expected to come in at 64.8 and that would be a very slight drop from a month ago. that report again is out at 10:00 eastern time and joe, i'll send it over to you. >> thanks, beck. wall street is sending a sharp and unam big use message to washington. cut spending and solve the deficit problem, now. and don't do it just with higher taxes. that's just one of the results of the exclusive cnbc fed survey. i knew some of this -- so that's what you were talking about, steve. >> yesterday, yeah. >> we were looking for maybe the most -- the one that really jumps out and that is the number of people that say, you know, we do have a spending problem. >> you know, joe, it's the first day of a two-day fed meeting. that means it's time for the fed survey and almost always we start our lead hit is about what
the market thinks we're going to do with the fed. but this time, as you said, the results jumped out so starkly, so amazingly that we want to just give you those results of the deficit and spending questions that we asked. so let's take a look at the three questions on spending that we did here. and you can see, as joe said, the message to washington, from wall street to washington is solve the deficit now. we asked, do you think we should solve the deficit problem, not at all? do we have a couple years to do so or should we do it urgently now? 80% of the 52 respondent we had that include economists and strategists and fund managers, they say we need to do this, and do it now. then, how should we do it? spending cuts. do we have time to do it? later. 38%, now, 59%. pretty unambiguous. there's a little bit more play when it comes to whether or not we should raise revenue. 53%, a clear majority say, we shouldn't raise revenue at all. but if you add up those who say we should raise revenue now and later it's 46%, so a little bit
more disagreement there. but overall when you take the 80, the 59 and the 53, pretty clear three-point message from wall street to washington, let's just go over it again. fix the deficit now, do it with spending cuts, and don't do it by raising revenue. that's what the economists on wall street and the fund managers are telling washington right now. let's take a look at the next idea about the debt ceiling debate. i think this is a really important finding here, guys. we ask do you think congress is going to increase the debt ceiling every time it's reached, refuse to raise it at some point and don't know? you can see 86% are saying that congress will raise the debt ceiling every time it's reached this year, when i think about some of the reasons why stocks have gotten higher because i think that thread along with the fiscal cliff has come out of the market and that there's overwhelming sentiment that coss i solve the get problem. we asked wall street to grade our treasury secretary going out and one coming in. you can see a pretty strong
sentiment that he was a seed secretary with a 2.2. jack lew, the sentiment there. 2.0. one more thing on the deficit i just want to say and maybe this is worthy of discussion here. i think this is a sign that things have improved, at these economists and guys on wall street are saying we should solve the deficit and do it now. i think if things were as bad as they were say the last couple years there might be less sense that we urgently need to fix the deficit problem. mike england from action economics said if we don't solve it now we'll get to the next cycle, as in the next downturn, with nothing in the tank to help the economy. so he's saying let's use this time right now to urgently address the deficit problem. andrew? >> steve, real quick. how does geithner get a 2.2 when he was on the job effectively ultimately saving the economy, and lew, who has never had the job gets a 2.0? >> that is the number that came in. i don't know the reasons for it. there wasn't a lot of commentary. there were -- >> what did paulson --
>> we did not grade paulson. we didn't grade paulson. but this is the -- >> you should >> you come on with a 2.0. you're going to a decent state school. >> i'm having that discussion with my son right now, joe, i don't know about you. >> but a 2.0 my parents would have -- they wouldn't have -- >> grounded. >> i think it was probably worthy of more discussion. it was a long survey this time around and we just asked -- >> i think next survey >> measure all treasury secretaries the past decade or two. >> and see who they rate an "a." >> there was a guy in animal house. >> joe are you saying? what grade would you have given? >> i remember one -- plutarski had a zero. he had no number whatsoever. and dean warmer, you remember? but a 2.0 is not that much above the average for the entire -- >> geithner's got a three. maybe a b-plus. >> it's probably fair to say this group skews a little bit republican and when i remember there the past, the question
about who they thought was going to be president it was obama 2-1. who they wanted to be president it was romney 2-1. that could be part of it. i'll be back at 8:30 by the way, with what's usually the first report which is the one on what people expect for the federal reserve at this coming meeting. >> okay. we're going to talk ford now. check out shares of ford as the company reported earnings. reporting 31 cents a share for the fourth quarter. automotive revenue was 34.5 billion. that was also above consensus and cnbc's phil lebeau has been speaking to ford's cfo and joins us with an update. phil? >> andrew i just got off the phone with the cfo from ford and two things stand out. one of those you just saw as we were taking a look at the ford chart. when it comes to north america, incredible strength that the company is seeing there. look at this, profit margins for the full year coming in at 10 % 10.4%. that compares with 8.3% last year. in the automotive industry, if you get profit margins up above 8%, 9%, you're doing well.
up above 10% you're running on all cylinders. he expects that to continue this year thanks to pricing and volume and they're start being to benefit from the mixed rotation more towards full-size pickup trucks with the f-series is the bread and butter of ford. in europe they're guiding for a greater than expected previously expected loss of $2 billion this year that's driven in part because of lower volumes for the industry as a whole as they continue to see weakness there and with the stronger euro, but this is important. bob schenks say they expect this to be the bottoming out year, the trough in terms of losses there europe. two pieces of news, strength in the u.s. and north america going to continue this year. in europe they expect this, even though a greater than expected loss to be the trough in terms of losses in europe. we're going to be talking with him first on cnbc coming up at 12:15 today. the power lunch, fast-time halftime report coming up at 12:15. back to you. >> phil the stock's been trading lower even though it was
significant beat, even though the comments you've just been talking about were a little bit better than expected. >> that's because if you look at all of the analysts within the last week they've all said we think that almost all of the auto stocks are fairly valued. look at the run-up they've had over the last four months. almost all of them are saying that's enough for now. in terms of the auto stocks. now, we might see that second leg continue three or four months down the road but generally speaking the feeling on wall street is that the run-up we've seen over the last six months in the auto sector, that has parked them up in terms of valuation, and that they're due for a pause right about now. >> phil lebeau, thank you for that update. coming up your tools of the trade. we're going to take a close look at equity and oil markets. ♪
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futures are still indicated lower. dow futures off by 15 points. s&p down by 3 points and the nasdaq off by close to 7 points. we did hear from eli lilly with its report on earnings earlier this morning. the pharmaceutical giant earned 85 cents a share, excluding certain items and that was seven cents better than had been expected. revenue also came in above consensus. the cfo of the company derica rice joined us earlier in the program. >> we had a strong finish to the year and in the quarter, our revenue declined 1% in the fourth quarter so we almost offset completely the impact of the loss of zyprexa. for some time we've been talking about three key elements for us to deal with the patent expirations. driving growth, advancing our pipeline and really cutting costs. so in terms of growth we had some key brands like cymbalta which grew 20%, our animal health business which grew 21%. japan where we had 14% growth and we're looking at double the size of those businesses. so that's been able to help
offset the impact or moot the impact of zyprexa and that's what drove the 85 cents our 339 for the year. >> let's get to our trading block. td ameritrade from chicago and managing director at research clearview energy partners. good morning to both of you. joe, let's start with you. how do you think the market is going to set up today? we have the ford news, we also have eli lilly and then we got the fed later today. >> it's tough to say. >> he we have one other thing i think that's actually being watched closely today, too, andrew, that's consumer confidence which normally doesn't necessarily get a ton of attention. but i think that because of the expectation is that it's going to come in at a five-month low, many people have their eyes on that one, perhaps much more than they normally would. so i would look for that number, also. you know the fed does start today, but as we know on these two-day meetings, day one is just a lot of waiting and watching. so not a lot there. and the other major factor is obviously s&p 500 cash was just
above 1500 last night. looks like it will open a little bit lower there. we saw the vix edging up over the last few days as we head into it. that's a number that makes a lot of people nervous. wouldn't surprise me again if we saw the market take another breather. >> kevin, where you at? >> well, you know, the interesting thing about the world is that it balances on oil pretty easily. you've got those automakers showing really great new high efficiency cars. that probably takes us this year, could be another 200,000 barrels per day of demand eliminated here in the u.s. with supply coming in possibly another 800,000, 900,000 barrels per day. owe pack can't clamp down another million easily so, it probably still looks like we're headed down for the year from here. but you know, it's winter, and all kinds of weather surprises can drive us to the upside. not during the mild snap we're halving here in the northeast this week but it's a long winter. >> what's your target? >> 93 wti, you've got upside if
you have another algeria. >> ken, last time i said joe and i think joe kernen wanted to answer the question. >> well -- >> joe kernen what do you think is going to happen in the markets? >> i don't care -- >> i care very much -- >> what are you answering? that you were more interested than our guest. >> too late. you weren't -- >> this is an old -- >> shall we -- >> shall we switch roles here? kernen, tell me, what do you think of the vix? >> that's why we call you j.j. sometimes instead -- >> and you made fun of it every time. >> like clarify -- you get booked twice as much. >> whichever name is always fine by me. >> i try and avoid confusion on your show. >> i do have a point. it's always hard for me to understand whether a really dormant vix is a sign of complacentsy or a sign we're moving higher. you talk out of both sides of your mouth. how should we read it?
>> well, so i think the way to read this, joe, is as a trend. and the trend is over the last four days, it's been going up every single day. even as the market goes up. so what that tells me is that the fear is becoming greater as we get to 1500, which i would expect. again, i agree with you it has been dormant. it has been a little bit strange. the other thing to keep in line is on the 17 line people have been coming in and buying calls for about a week straight so i do think that for the first time since, you know, we've gone through the whole fiscal cliff, people actually feel they need to buy protection. i think the bigger thing before was, there was no major need to buy protection. >> what's your downside? how far back do we go? >> i think 1260 on the s&p, andrew. >> it's interesting. we had a 5% january. everyone's already thinking about that was a good year in january. >> yeah. >> exactly. >> so thinking, you know, and everyone's so complacent to the ups, and people are feeling pretty good.
they're going to be pushed off the debt ceiling crisis for awhile. so people are invested but they're intellectually hedged. >> j.j. and kevin, i will thank you both, gentlemen, and we will see you very soon. >> you're welcome. >> have a great day, guys. >> thank you mr. kernen. >> absolutely. >> check out what is still to come this morning at the top of the hour. we have wells capital management chief investment strategist jim paulsen. he will tell us if this market still has legs, or if now is the time to try and take some chips off the table. he's joined by ing investment management's doug cote. that'scote, right? >> i don't know that guy. >> i know the honeywell guy. >> i think i'm saying it like cote but i think it's cote. plus green bay packers ceo mark murphy talks super bowl and the business of football. "squawk" will be right back. >> his reputation is expanding faster than the universe.
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♪ let's take a look. let's take a look at the animal orchestra and some stocks to watch. playing a lot of country for you, today. >> you know how i love that country music. >> pfizer -- can you get guns and garden magazine, do you? play a lot of luke ryan? >> we subscribe. >> you're at home watching joan rivers talk about fashion. i mean, it's good, though. we got the whole gamut. we cover the whole gamut on this show. we got it all covered. you can do -- >> real housewives of whatever. we have that going on in our house. >> on monday you do the commercials. i'll do the super bowl and i'll
do the actual -- i mean we got -- >> it's perfect, right? >> are we not like yin and yang. are we not like one of those signs? let's look at pfizer. the drugmaker reported four vt quarter profit of 47 cents a share. revenue also beat consensus. yahoo! earned 32 cents. four cents above projections. and seagate earned $1.38 a share, 11 cents above estimates. revenue also beat consensus but its current quarter revenue fell short of what analysts -- the one thing we are going to do at polaris, we're going to have one of those motorcycles and i'm going to get my license and do it with a side car and we're going to go out and we're going to tear it up. >> yes. >> you don't want to do -- >> correct. >> we're going to get it. we'll both wear helmets. wouldn't that not be -- >> who's in the -- >> he doesn't drive a stick. >> is that cool? >> remember when we were in the ferrari and i got you that -- >> yeah.
>> the side car is even going to be better. i think they'll do this for us. >> i didn't even know -- they still make side cars? >> yeah. >> okay. >> where is becky going to go in all this? >> i'll throw a scarf to kick off the beginning for you guys and say go, go. >> let's get back to our guest host this morning, barry sternlicht is chairman and ceo of starwood capital group. i want to talk about dealmaking in this world and what's going on. it does feel like there's a confidence coming back. i saw michael dell in davos. we were talking about davos earlier. he's got a deal on the table. we'll see if it happens. what's your sense of what we're going to see this year? >> still, i think, in corporate it's going to be slow. i don't think investors and heads of p/e firms are so confident in the direction of the economy and it's hand to want to leverage for a lot of equity if margins are kind of high, which they are. feels like you're not going to get the returns on equity you think. so i don't think you're going to see a lot of large p/e deals. i'm surprised the corporate
sector's been so quiet. particularly in where their stock's at. even the dell deal is private. >> right. >> and it's only because michael seems to want to do it it's putting up the bulk of equity it looks like. but i think in the property sector you're going to see a lot and there's going to be a lot of big trades. people are scrambling for yields globally. and they're getting more comfortable that real estate is a safe harbor for them. so i think you'll see there's big, big tons of capital offshore. >> you think there's a window for a number of ipos either in real estate business or broadly? >> yeah. >> you want to see -- >> do i want to go public? we have a public -- >> i know you have a public company. >> we have a home builder that's going public on thursday. >> would you ever want your main vehicle to be public? >> i've thought about it. i've been public for a long time. you know, star property is public but i'm not public. >> right. >> after running star hotels for ten years i've done a lot in the
public market. i don't know. there are benefits and burdens to it being a public company and the alternative investment business like the blackstones and the carlyles and the apollos and oak tree that have all gone public. i've been approached by bankers. >> would you invest in one of those companies? you think they're -- >> they're competitors. not all of them. i actually -- >> moment -- is that a good investment? >> actually -- >> -- point. >> i have looked. they're asset gatherers today. they have very good recurring fee streams. and i think the hard thing to know is the motivations of the founders. what is the ultimate -- they're aging in many cases. and what are they going to do? i think the companies are all different. most of them rely now, you get a big multiple of current fees and the insebives and the funds are hard to value. so i think they get to a point where they're very cheap. i think they were cheaper in the year. they had a big rally off the floor. and i think they were, you know, they were -- people don't know what to make of them. but i think some of them were
pretty cheap i'd say. certainly they've gotten pretty cheap. >> you've never bought one. >> i actually don't own them now. i own sort of something like them. >> yeah. >> you don't want to go there? >> okay, we'll let you off the hook. barry's going to be sticking around with us for the rest of the program. maybe we can pull him back off the hook, if we can. coming up the futures looking lower this morning, as investors wait for the fed decision, and jobs friday. we're going to talk markets with jim paulsen and then green bay packers ceo mark murphy is going to join us to preview the big game sunday and talk about the business of football. may be surprised with the results.
the s&p taking a pause in that eight-day winning streak. will corporate earnings and this week's gdp and jobs data bring the momentum back to the rally? >> 60% of the time it works. every time. >> that doesn't make sense. >> and the fed kicks off its first meeting of 2013. will continued support of low interest rates bolster market confidence? more results from cnbc's exclusive fed survey. >> and the countdown to the super bowl is on.
green bay packers ceo mark murphy will join us to talk business, the economy, and sunday's big game. the third hour of "squawk box" begins right now. >> welcome back to "squawk box" here on cnbc first in business worldwide. i'm joe kernen along with becky quick and andrew ross sorkin and our guest host this morning, barry sternlicht, chairman and ceo of starwood capital group. and we're going to talk markets in just a minute. with wells capital management, what are you, like a cio or something. he's a big investment -- big swinging investment guy at wells. jim paulsen, and ing management doug cote. first andrew has your morning headlines. >> let's talk earnings news this morning. ford just earned 31 cents per share for the fourth quarter. that is six cents above
estimates. revenues were also above street consensus. ford did increase its estimates for 2013 european losses but also says this year will mark the bottom for europe. and dow component pfizer reporting quarterly profit of 47 cents per share. that's exclouding certain items, three cents above estimates. pfizer's revenue also beating consensus, though, it was -- it was down from a year ago as it faces increasing competition from generic drugs. finally the latest assessment of the housing market still ahead today. the case shiller report, that's coming at 9:00, 9:00 eastern time, expected to show 5.5% increase in home prices for november, compared to a year earlier, so a lot of data that you want for the markets this morning. >> that's right. let's get a check on the markets. we've been watching those u.s. equity futures and they have pulled back a little bit. yesterday, the markets closed slightly lower, but it was enough to end an eight-year record in terms of the winning number of days. eight days in a row that you had seen the s&p higher. six days in a row for the dow futures. overseas this morning, in asia, or overseas overnight in asia,
you can see that the nikkei ended up by about 0.4%. in europe this morning, you'll see similar things to what we've been watching with the futures here. the dax is down a quarter of a percent. same story in france. ftse in london is slightly higher, only by about five points. the s&p pulling back from the eight-day winning streak. the question is, will earnings and jobs numbers this week help or hinder the rally. joining us right now is wells capital management chief investment strategist jim paulsen, and doug cote who is the chief market strategist at ing investment management. our guest host, of course, barry sternlicht, chairman and ceo of the starwood capital group. jim, you have been positive for a very long time. you've been right. but when you see what's been happening with this rally, is this still a time where you would be advising people to jump on board, and put more money into stocks? >> well, i still think it's going to go higher over the year, becky. i still think that there's a lot of positive things happening here with economic momentum, valuations are still low, people
are still under allocated to equities. a lot of forces to the upside. the question is, you know, has it come too far too fast here in the short term? certainly it's not going to be a straight line this year. so there's going to be some period of pause. whether it's now or 1565 where we're trying to set a new all-time high in the s&p is difficult to tell. i would say this, though, that right now, that there's still not a lot of breaks on this thing. i know that markets had a nice run. and i know that optimism is climbing. but you still don't have, you know, you still have ten-year treasury below 2%. you haven't had gas prices back up. you haven't had the dollar back up. you haven't had the money supply slow down. not a lot of breaks yet on this thing. so who knows. what i would suggest to people if they're under allocated to equities, i would continue to work on working your equity allocation higher because i still think there's more room to the upside. >> what is under allocated in your opinion? >> well, it of course depends on
each individual's individual parameters, their age, their special circumstances. and everyone should have a target sort of allocation. but in whatever that is right now, i would certainly be over inflated there, 10% to 15% above your normal weightings. i still think there's pretty good upside. i don't know if i'd put it all in there today with the market that's just made this kind of run. but i'd take any kind of pauses or pullbacks as an opportunity to maybe work slowly towards my target allocation. >> doug, how about you? >> i think you have to be very careful, if you look at, we have a good economy so the consumer is doing okay. record retail sales. housing is doing fantastic. but if you look at the fundamentals, that drive the markets, i think they're challenged. i think you have -- we had our first negative quarter in the third quarter of 2012, where about 2% going to the fourth
quarter, in earnings, and i think earnings right now is mainly driven by financials, financials have 40% growth. if you look at the nine other sectors, it's flat to negative. so i think we still have some headwinds in earnings, and if you look at manufacturing, i'm very interested in this friday's manufacturing report, because all the regional indices have been negative. >> you know, we were just talking off camera, barry, and you were talking about the economy as you see it, things are really kind of moving along, at least in the areas that you're watching. >> yeah. the economy, the whole country is a different recovery point. but the housing market as you touched on, it's definitely affecting spending patterns which is the bulk of our economy consumer spending. so the interesting thing about the housing recovery is as real as it looks and does it matter you have these investors buying up thousands and millions and they're propping up home prices and that's been read in all these reports on home prices.
but if they step away, if they get nervous because they're driving prices way beyond what people would have thought nobody expected to see 12 to 20% increase in home prices. they're ricocheting because there's such great investor appetite. but it's not natural buyers. on the other hand does it matter? it's like a picasso sale if everybody buys picassos and there's none for sale, that's the price for the picasso. so people are really looking at the housing market now and feeling like they're reek wittizing themselves, 000ed in the right direction. it's a rolling stone, it gathers moss. it's working. appraisals are coming in. there are transactions, higher prices and it's freeing up a lot of capital i think. it is a little bit of a prophesy. it's not something many of us would have foreseen. the scale of the purchases is mind boggling. billions of dollars going into buying surplus housing. >> at rolling stone gathers no moss. >> this stone is gathering a ton
of moss. >> what's the saying? >> it gathers -- >> don't throw a stone. >> it's got a lot of moss attached. >> it's i a snowball. >> a snowball? >> picking up ground as it goes. jim this is more optimistic or more pessimistic i'd have to say than i've heard you in a long time. is this because things have run so far so quickly we were talking earlier about how the market was up 5% just -- he was saying -- >> compared to him. >> -- hold off. >> it hurt -- >> don't do it unless there's a pause or a pullback. and is that just because we've seen so much of a run so quickly? >> yeah, i think so, becky. i mean, i know we're not going to have a straightline advance. but i still think we're going to touch 1700 this year on the s&p 500 sometime. below 250 and 65 get excited about being in new high territory. but you know to call how that exactly is going to play out, whether we pause now and run, whether we run hard now and then pause i think is a really difficult call. i'll tell you what, though -- >> why wouldn't you jump from right now? what are you waiting for? >> ultimately -- >> i'm not saying you shouldn't.
i'm not saying you shouldn't, andrew. i did say i would continue to work my allocation higher in equities. i don't know if i do it all in one day if you're way underweighted, pick today to get there. i take a slower approach to work that way. but i think the real driving force here going on this year that hasn't gone away, is that every year of this recovery, i would suggest to you that we go in to it with the idea that it may end this year. and i think what's happening a little bit is people are starting to think, well, maybe this is going to look -- this is looking more like a sustainable recovery. we're talking about parts that are coming to the in the united states. the housing industries coming to the. home prices are rising. unemployment rates falling, labor force is growing. confidence has gone to a five-year high. a lot of pieces that weren't working have come together and now they're all working. we also got china coming back. we calmed down europe. and i think if people can expand their investment horizons beyond just this year they can afford to pay higher valuations.
and that is the key driver. it's not about earnings. it's about what the valuations will do on those earnings we've already produced. and i think that still has a ways to go. >> jim, we go from worrying about what might happen, in like europe, or i don't know, another financial, you know, washington derived financial cliff or something, we go away from that, where that's -- and now we're actually starting to say, wow, what if these guys do immigration, what if these guys do something with entitlements. and it's a what-if on the good side of what might happen, and that could be really powerful. even if corporate profits do, even if margins have peaked, and if there's an austerity headwind and we got to cut some spending. some of the stuff could be powerful, and maybe we're not a 2% grower. maybe we'll get back to where we were, in spite of, you know, all this washington stuff. >> well, i think -- i don't think we are a 2% grower. i think we're going to grow more like 3% this year. you know, we've built a lot of the things we need 20 do to produce growth. we've re-established balance
sheets in the household sector. we've got pristine excess buying power in the corporate sector. we've cheapened the value of the u.s. dollar to improve our competitiveness in manufacturing which we might pick up a bigger share of world trade. >> back to his old self now, barry. there he goes. >> you know, i just worry about this complacency in the world right now. it feels really too good. considering we -- >> how do we have complacency after four years of worries about the end of the world? i just don't think -- >> we melted across the board. equities rallies i mean it's nirvana for investors. interest rates we talked about nowhere, 2%. and europe, europe we operate in europe. europe is sort of a very sick child. and we may have got them on the table and they're administering a lot of band aids but there's social unrest possibilities. i keep thinking about what could go wrong and i keep telling these guys off camera there's a hotel conference on the west coast last week and they put up
a slide about how bullish they were in the travel industry, and then they said what could go wrong and there's a picture of the grim reaper and the next slide came up and it said absolutely nothing. and that terrifies me as an investor. and we're used to doing the opposite of what everyone's doing so that will tell you, take advantage of the rallies that you've seen, and put some money on the side, come back in as a maybe corrects it in here. the vix down at 12 or whatever it was the other day. that just feels -- there's too much wrong in the world for that to be right. on the other hand, climate are worried maybe it's good. investors are getting bullish and money's flowing into stocks. when your housekeeper says what stocks should i buy, that always makes me nervous. >> doug, similar to what we heard yesterday from caterpillar, the ceo just talking about how they can't really see around corners like they used to be able to, a little worried about the second half, if there's a real potential for the second half to be way better than the first half, but then, what you saw back in 2010, and 2011, was that spring slump where things kind of fell out from under, and it's
not just investors who have this, you know, twice burned mentality. it's also a lot of ceos. >> well, corporate earnings are the canary in the coal mine and i agree that the u.s. is -- looks the best, but if you look as barry said if you look at europe, if you look around the world, half the revenue of the u.s. corporations are overseas. so i don't buy that it can just be good in the united states. europe being in recession continues to be in recession we're at great levels. so it feels good. but markets don't buy levels. they buy growth. and i don't see where the growth is coming from. >> all right. jim, doug, guys, thank you very much. we'll talk to you again soon. and of course barry is staying with us forred rest of the show. >> we'll have more from our guest host, starwood capital chairman and ceo barry sternlicht. and the fed kicking off a two-day policy meeting. we're going to tell you how the new voting members might influence monetary policy as we head to break take a look at u.s. equity futures at this hour. we're down a little bit. at optionsxpress we're all about options trading.
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welcome back. to "squawk box." going to be watching shares of yahoo! this morning. that was -- >> yahoo!! >> i don't know too many people that thought at 14 it was going to 21. >> dan low did. >> not a bad little trade for him. >> nice shout-out there. >> in its first full quarter under marissa mayer the company reported four cents above estimates. company benefited from higher ad sale prices. yahoo! also predicted a modest increase in revenue for the current fiscal year. mayer says the road to revive the company's workings will be a long one. >> let's get back to our guest host barry sternlicht chairman and ceo of starwood capital group. since we just mentioned dan lobe and since you do travel among a special billionaire set between loeb, icahn, and ackman, all of whom i think you consider
friends of yours -- >> i don't -- >> what do you make of this? >> it's great theater. what do i make of this? i don't know. it's -- it's entertaining. >> that's as far as you're going to go? do you have a few on this -- >> herbalife? >> on herbalife -- >> i'd rather that comment. i mean i really -- it's just amusing. i mean it is fun. i mean it's fun. i showed the video from your station to my whole family over the weekend my kids were like, ah. so it was fun. >> we were talking about -- >> i'm not sure they would like to have -- i've done that, by the way. >> either one of them. >> i think both of them. >> you know, but look, they're passionate people. that's what you can say about bill and about carl. and they're very strong views, so it's combustible and it exploded on set. >> what's great is i think ackman, ackman gets on a, you know, he gets an opinion about
something. i saw him with the hong kong dollar, and he'll give you 400 slides to show you why he's going to be right. it doesn't always pan out. i'm sure he thinks he writes about herbalife. carl doesn't give a crap either way. he's pissed at ackman and he's going to get him in a vice grip. he'd like to run that thing up to 50 or 60 bucks. >> carl doesn't really care. the benefit of -- >> he doesn't need the money, either. i know. >> but a short squeeze is a painful, painful thing. >> it's not that big a market cap. look at netflix. >> right. >> it was up like 100 points. >> you think carl has any feeling at all about herbalife, though? >> i'm not sure. >> i don't think he has any -- i think it's that ten-year -- >> carl once called me when there was a takeover of fairmont hotels and he said, i was -- that was a business. he's very good trader. carl's a great trader. >> he is. >> he's got really good instincts. >> you think it's all gut for
him. >> i think bill ackman may spend six months building these -- >> that's true. >> and analyzing numbers. >> they've both had hits and misses. they've both taken on things that didn't work out. some work, some don't. we'll see how pennies works out. for my business that's fascinating. >> what is your expectation on pennies? >> i think even if -- well he's sticking with his man. i don't think he could have imagined that he'd lose 25%, 30% of sales. i mean that's -- i'm not sure that if you're a mall owner you want pennies in your mall. because don't you own the mall? why would you want everyone to go into penneys. penneys doing more sales is good because that side of the mall has probably been not the highest rents. the recognizes are sort of nordstrom's and neiman and bloomies hat do better. mixed. it is a very tough experiment. i think americans, this is again, gut instinct has worked well for me. americans are used to discounts. we're used to coupons.
if a thing sells for a buck all the time, if the sticker says it was three bucks and you buy it for a buck, even though the price -- you buy it if it's a buck and a buck you don't buy it. we are so conditioned to sales. and coupons. and special deals. >> penneys almost admitted that with their promotions that they did over the holidays. >> yeah. >> with coupons and things. >> it's so different. the apple -- >> you know. >> it's interesting, when eddie bought sears i was thinking he had this opportunity for this radical transformation. i think he turned sears into suffrages. they took a department store, an amazing turnaround story. he chose a different path and he use to gush cash, sell assets and raise cash and didn't invest as much in the stores. this is the opposite. you're seeing this complete makeover change while it's public, which was a bold move. so for investors it's a question of when do you get it? do you get it to work between now and then, it's still -- >> how much patience? >> we're watching the sausage be
made -- >> lately about that investment. >> i've talked to him but not about -- >> i know you're friends as well. >> yeah, yeah it's interesting, though. it's the whole retail landscape is fascinating. you know, the department stores, everyone kind of in debt. and they're doing pretty well. >> amazing. >> amazing. >> done an amazing job. >> let me ask you a quick finance question in the last break we were talking, i hope i can say this, whether there's money to be made in the world of financing. who was buying apartments and this and that. and it seemed like people from your generation were buying these $15 million, very expensive apartments that had been successful in your business but that this next younger generation has not been. has not and doesn't appear to be able to ever make the kind of money that was made before it. do you think that's right? >> i think our president wants that to be right. i think it's -- >> but is that about politics? is that about the economy? cycle? >> it's about a lot of things. obviously he'd like the banks to
be commodities and to be out of high risk. and the banks became -- became commercial banks became investment banks. some u.s. banks are now commercial banks. and he wants them out of the high risk, high reward businesses. so, the comp packages in general in the commercial banks are coming in. and that's affecting the housing market in places like connecticut, fairfield county, new jersey. new york city is such an odd place, because we're seeing these gigantic trades. and at huge prices, and it seems like people are just spending their savings. i guess my generation is saying i'll leave it to my kids and buy a $15 million apartment. it seems to be sort of an odd thing. it's rolling. year seeing these money managers buy incredible places at crazy prices. it's not as much foreign capital in housing market here. >> there are two ways of looking. people believe it's a zero sum game, and a person doesn't need that much money, if you get to a certain amount of money you should stop because other people could use it that don't have it.
unfortunately, that's the worst way to look at things. and you can create wealth, and you can -- >> it's so funny, i think about the world today and i think about the world of the 1800s, we had these robber ns these guys that built this country, the vanlder builts and the rockefellers, and the mellons, we used to think they were deities and there was such disparity of wealth, they built the railroads and the roads and the auto industry. but today, we're not thinking -- >> the attitude -- >> but it's a thing that always drove this country toward. >> there's nothing wrong with people that drive a bus for a living and i admire that. but you don't necessarily hold them in high regard if you drive a bus for 40 years and someone who does well -- >> we can talk about education reform. i think that's what -- that's the future. >> but it's reform. not necessarily just doubling down on the way we do it right now. i mean that's where we get into trouble. >> it's not working. >> right. >> i'm with you. >> stick around, we'll talk maybe a little education in a little bit. in the meantime, we're going to talk about signals from the fed,
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face time and think time make a difference. at edward jones, it's how we make sense of investing. welcome back to "squawk box," everyone. yes, barry sternlicht says it, and it comes true instantaneously. we were just having this conversation, but jcpenneys no discount experiment is over. the struggling department store
chain is bringing back some of the sales that it got rid of a year ago. it will also be adding some new price tags and signs to show customers how much they are saving by shopping at penneys. yeah. barry, you're a genius. however the company tells cnbc this morning that the cornerstone of its value proposition continues to be its everyday prices. shares of jcpenney barely budging this morning. but you can see the steady decline that has gone along with the drop in same-store sales at these stores over the last year. when we come back, green bay packers ceo mark murphy is going to be joining us in the "squawk" owners box and the fed kicking off its first policy setting meeting of the year. steve liesman has more results from cnbc's exclusive fed survey. >> becky, when will qe end? how much qe will the fed do this year? and most importantly will it stop on a dime or taper off? we only have the results of the exclusive cnbc fed survey when we come back.
fewer shipments during the quarter as it upgraded it largest production facility. and tyco earned 40 cents a share for its fiscal first quarter. one cent above estimates. the maker of a lot of different stuff. fire and security systems was helped by higher margins at its north american businesses. and international paper earned 69 cents a share. excluding items the fourth quarter was four cents above expectations. its overall profit was down versus a year earlier on restructuring expenses and higher operation requests. home builder d.r. horton earned 20 cents a share in the first quarter in this case, fiscal first quarter. six cents above estimates. the company was helped by a boost in both home sales and higher prices. orders were up 39% year after year. >> a little bit of breaking news. apple just announcing moments ago a new apple ipad with 128 gigaby gigabytes. so for those of you apple fans and fan boys, that piece of news
you can run out and get one right now. in the meantime, steve liesman's got more of that cnbc exclusive fed survey. want to get some of those details. >> 32 to 12 that's a big jump there. it's the first day of the fed meeting so we have the results of the cnbc fed survey which can tell you what the market expects for the federal reserve in this world of quantitative easing. the most important question we ask for 2013 what does the market expect? how much quantitative easing does it expect? here are the results. you can see here, a big this is a distribution chart percentage of respondents answering at a given level. you can see 35% saying it will be a trillion dollars this year. let's look at the average, because you have to average in those who are below and those who are above, 858 billion for a monthly average this year of 72 billion dollars. that is a bit below what the fed is doing now at 85 billion, and it's very interesting why. it's because the market expects
tapering to happen 73 we'll show that in just a second. first i want to show you when the market believes quantitative easing will end. the biggest answer, the most popular answer, the fourth quarter of 2013, but look at this wide distribution. you can see here that some expect it to go on all the way into the third quarter of 2014, or even later. i think this is a problem for the fed. and i think we can explain why they have this problem in just a second. first i want to show you about this tapering. first thing our polls show 76% of respondents think the fed will not end qe on a dime, it's going to gradually taper it off as it has done with several of its extraordinary programs. so, when will that tapering begin? this is very important to note. june to october is somewhere in there, is when 57% of our respondents believe the fed will begin to gradually reduce the amount of quantitative easing, and that's why you've got that $71 billion average below the 85 they're doing you can see you go on here some expect it to be
much later. now we ask, oh, yeah on to the next one, we ask why, what do the people think about the fed's new target, on to the next stream here if we could. we'll do this right here before we go here. 6.8% is the unemployment rate when the fed will end qe and 2.6% is the inflation rate. that's come up on unemployment and down on inflation. so the fed was able in december to narrow the targets where the market believes the fed will move. now we're going to move on to what the market thinks of the new things that the federal reserve is doing. we ask what's the best way to run monetary policy? economic targets, more calendar dates. overwhelming support for what the fed is doing using economic targets rather than calendar dates. but a lot of criticism about how the fed is executing it. take a look at their results here. are the fed targets clear? 38% said yes. 48% saying the fed could do more and 10% saying not at all. so that's 58% if you take these two to the.
and i think that's why we have this wide distribution. i don't think people understand exactly how the federal reserve is going to react to incoming data. they've moved to a new metric. one that used to be more clear if you told me 2015 i get that. but now that you twelve me 6.5%, 6.8%, 7% unemployment i don't think the market really has a fix on how to gauge the fed's reaction to incoming data. >> okay. mr. liesman there's a lot to chew on there. i think we're going to talk to our guest host about some of that data. >> steve, thank you. right now let's get some more from our guest host barry sternlicht who is chairman and ceo of the starwood capital group. barry, you have an ipo that's coming up. tripoint homes. this is a home builder. hat do you see happening in the home market overall? so many people are trying to figure out how things are headed. if you see good things there, what does that mean overall? >> the housing cycle is five or six years old right now.
the market turned down in '05. and in general we spent basically '08, '09, '10 buying residential lots across the country, and really, the demographics of this country for real estate investors are so much better than western europe or china. we're growing and we're going to grow 3 million people a year and no political administration can stop that one. with 3 million people a year you're going to create 1.2 million households about two-thirds of them will buy a house and a third of them will rent. you'll look at it for stabilized numbers for houses roughly a million single family homes. we're going to get back to probably a million in a couple of years. i think we're going to see 700,000 this year and it's simply the forces of demographics at work. you can see that's why we bought the land. you could see if you were patient, it's very hard to imagine losing money. and so we bought them the very
steep fractions of replacement cost, $12,000 a lot and a lot costs $50,000 for all the improvements, utilities and everything. so you're seeing around the country, as most of these markets where the country's -- middle of the country's doing great. energy fracking in texas, montana's doing great. and now the coasts are doing well. california's coming back. california's almost balanced their budget. and amazing. big spending but a lot of taxes but they're close to balancing their budget. and florida's under the leadership of the republican governor. that state is now the number one state in the country. and it is really, they've reformed their education system. you have the hispanic influence in miami. where we used condos. we had 2300 condos we have 80 left. in this acquisition a couple years ago we got a view of all the urban markets in the country. the housing market is crazy. it's really strong. i think you'll see home builders
have a multiyear recovery of that. and that's, i think i said last time i was on, a couple million jobs will be created in the housing market. those are the jobs that this labor force can do right? they're not going to work at google and apple but they are going to be able to help with the jobs that were lost and never came back. construction jobs. and you're seeing it across the country. >> so it's going to be a real return, a real renaissance -- >> i don't think stabilized you're going to see housing prices run away. but i think they'll continue a fairly modest 3% to 4% annual growth now. there's certain places that's not true. south beach is crazy on fire. >> you're behind so i don't understand the rick scott phenomena. sounds like florida is doing so well. every once in awhile i go to the huffington post to see what's on it. they've got a list of infamous characters in history there was pol pot and then there was rick scott. has he practiced genocide at any point? what happened in florida? >> he's a guy --
>> what's your impression of rick scott at this point? he's got this horrible rap, why? >> his rap is tough. but he's had a rough rap since -- >> maybe he doesn't have -- >> a soft hand. >> he's pretty direct. >> you do business in florida, the state -- >> we do a lot of business in florida. >> can he get re-elected? can he overcome the media and everything else down there? the state is humming, right? >> the state is -- i think he might do fine. i think you'll see who votes. >> charlie crist is head now. >> -- assessing -- oh, he -- >> he used to live up here. he's done a nice job. that state has no income taxes. that's a big deal. it's going to be a bigger deal. that's really helping the state. you see a lot of people from the northeast in these high tax states. >> when you say it's great for business. that helps the jobs picture that comes, too, to the state? >> yeah, orlando is coming back. we own a lot of apartments there. we own some land there.
it's -- tampa is coming back. south florida is coming back. not so good palm beach and fort lauderdale. >> so he's great if you like growth in the economy. >> fort lauderdale has a port and they're widening the panama canal, by the way, so the port of port everglades will be one of the most important ports of the united states where fort lauderdale is. creates a lot of jobs, a lot of trade. it's pretty good in florida right now. >> it's florida against texas. >> right. >> in terms of -- >> and they each have humidity. california -- >> they've both got that going for them. for now. we'll see what happens. >> probably a little worse in texas in the summer. >> more from -- more from barry just ahead all this week we're talking to nfl owners about the current business environment and the super bowl. up next, go to the ceo of the publicly owned green bay packers. mark murphy is next. ♪
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welcome back to "squawk box," everyone. there have been some red arrows in the futures market this morning. at this point things are really moderating. dow futures down by less than four points, s&p futures down by less than a point. we have had some earnings that have fed some decent numbers this morning. we'll see how things fare as we get closer to the opening bell. also some more details on that apple story that we brought you just a few moments ago. the company announcing a 128 gigabyte version of its fourth generation ipad. that is twice the capacity of
current versions. this new version is going to be available next tu. it will cost $799 for the wi-fi model and $929 for the one with mobile service. joe? >> thanks, beck. we are counting down to the super bowl with our "squawk" owners -- "squawk box" owners series. joining us mark murphy ceo of the green bay packers. the nfl's only publicly owned team. and, mark, i saw the packers play and aaron rodgers, i actually thought they'd be in the super bowl again. i don't know what happened. and -- in that -- in that -- in that game where that other team scored so many points. but with your salary cap, what do you what do you do with that? you got a little bit of room to maneuver although you like to draft players not do the free agent thing but what do you need to do at green way to get all the way next year? >> well, i think -- i was very disappointed, like you, that we're not down in new orleans getting ready for the super
bowl. but, you know, it's what makes our game so popular. it's so competitive. and, fine line between winning and losing is very thin. but you know, give credit to san francisco. we played them twice this year and both times they beat us soundly. they're a very talented team. obviously they made a difficult decision, you know, in changing quarterbacks. you know, while they were still winning. and it's worked out for him. he's a real special talent. and you know we certainly didn't have an answer for him. >> a lot of people have gotten hurt counting the ravens out, though, haven't they? >> yeah, they, you know, it looks like, you know, the last few years, the team that gets hot at the end of the year is the one that wins the super bowl. two years ago, you know, we barely made it into the playoffs, as a wild card team and then ended up winning the super bowl. last year the giants got hot at the end of the year. you know the ravens, i think they lost four out of five at the end of the season.
but they're getting people healthy. and you know, they're playing with a lot of confidence now. and i think, you know, the emotion, and you know, the leadership of ray lewis has been key to them. >> yeah. i think about the nfl, and i i mean it's a fascinating subject to discuss. i think about roger goodell, i think he's phenomenal. i don't know if i'd want that job. here he has maybe the greatest, you know, he's sort of the caretaker of the greatest brand maybe in the world, at least in the sports world, and yet there's all these things that seem that i'd be waking up in the middle of the night worrying about. i don't know whether it's concussions, or you got people saying i wouldn't want my kid playing football. i don't know how many lawsuits the nfl is facing at this point. but hundreds i would think. >> thousands. >> thousands. >> literally. and it's all on concussions. roger has very, very difficult job. but you know, you're right. i mean the league is, you know, in terms of popularity, and the
strength of the league i don't think it's ever been better. but we're facing big irchallenges. and you know, one of the big challenges that we face in some ways, it's our own challenge is how great the experience is at home and watching tv. >> that's another one. >> so a lot of us have really focused on what can we do for the end game experience to make sure that continues. >> you spent some money on lambeau but do you you can make it really nice but it's still really expensive to go to a game and does there have to be some discounting at to get people into the stadiums instead of back at home with the big screen and all the beer they can drink? >> well, you know, that is a worry. you want to make sure that you're affordable. you want to make sure the families can still bring children to the game, and that's -- that's your future. fan base there. and it is an issue. we try to be at or around the league average. you know, we don't want to be too high or too low and given
our ownership structure, we want to make sure we're as affordable as possible. and you're right, that's part of the issue. people can watch, it's not free, but you know, not a big cost to watch the game at home on tv, and you know, with some of the improvements with hd now, and the sunday -- >> those speakers. you can almost feel like you're getting hit yourself with some of those speakers, too. >> i know myself when i go to a -- when i go to a game, i'm at all of our games obviously in person, but you know, you miss some of the amenities that you get on tv. you know, the replays, and the yellow line, and the -- >> yeah, right. >> they really make it very, very nice to watch the game. >> mark, how much -- >> but that's one of the reasons that we're so successful. i mean the nfl really, if you look at it, of all the sports, is really made for tv. there's stops, there's -- >> the numbers are sick. the numbers are sick. now, i mean they just you never would have thought of it, andrew? >> mark, how much is the super
bowl worth to a team? and how much to both the owners and the players? >> well -- >> in monetary terms? >> it's a set amount. it's based on the agreement and that's kind of gone up over the years. certainly a lot more than when i was playing in the '80s. but you know, the super bowl is, you know, probably the biggest media event of the -- not probably, of the year. from an ownership standpoint, you know, i know in our experience last year -- two years ago, in winning the super bowl, pretty significant. you know it helps us in a lot of ways. i mean a lot of the, you know, your tickets, those are all -- >> sit millions of dollars, tens of millions of dollars -- >> in terms of our apparel sales, business to our hall of fame, stadium tours, things of that nature. really, it really took off for us after the super bowl. >> all right. >> have you seen the kate upton commercial? have you --
>> what's the kate upton -- >> no, i haven't. >> but i can just imagine. >> you know, i've been -- >> apparently she's a big football fan. >> what's the line this week? >> it's nine points isn't it? or where is it did it come down at all? you know -- >> i don't follow gambling. >> oh, yeah, yeah yeah, gambling going on here? you're shocked. what is it? >> i know the 49ersers are favo. it should be a great game. you've got two of the best defenses -- two best teams, but probably the best two defenses in the nfl. >> appreciate it. best of luck with your draft choices, and next year, too. >> thanks. i appreciate it. >> okay. coming up, stocks on the move ahead of the opening bell. we're going to talk more with jim cramer after the break. calls to generate income? with fidelity's new options platform, we've completely integrated every step of the process, making it easier to try filters and strategies...
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welcome back to "squawk box," everyone. jim, we're watching several companies with earnings this morning that came out with better than expected numbers. do you see anything that really jumps out at you there? >> i'm reading a horton release, and i can't believe how strong that particular component of the
economy is. barry, 700,000. i had dan fulton on my show on "mad money" on friday. he's the ceo of wirehouse. most bullish story out there in america today, barry. it really is extraordinary. >> barry, what was that? >> i was going to say that 1 million is probably 300,000 in multifamily and 700,000 of single family. i was just talking about single family. >> wow. >> these are big numbers, barry. i think your point, who gets hired to build a home. all the people who can't get work in a high-tech job. so you have the oil industry who can hire people with lower skills. the housing industry. this is how you eventually get a return to employment. >> plus, you have ford that came out with numbers that people are kind of going back and forth. >> ford's raising -- they're hiring 2,000 people. everyone knows europe is very bad. i was surprised they took it down again. so obviously ford can't ramp here. but what's good about ford is
that in america, business is incredibly strong. and latin america is much better. asia's coming around. but europe, i was surprised. i think you've got to be worried about the japanese. i think the japanese are the equivalent of dumping cars everywhere, and that can hurt europe, too. >> jim, you sound like you're losing your voice. >> ah. >> working too many hours, working too hard. >> i'm trying. >> take it easy. you've got a long day ahead of you. >> you don't have to be training for the eagles. you're saving your voice. >> i agree with the gentleman from green bay, that the niners look terrific. but i would say that the seahawks had a better defense than the ravens. >> seahawks are great. this was a great year, jim. i was thinking about that. a lot of times there's a game on, it's like i don't even want to watch it, there's so many games on to watch. it's these new players. >> and there are people on both sides -- look, ray lewis is on a
mission. and you have people who hate ray lewis. a rookie quarterback from the niners. now yesterday i'm looking at this fan magazine, joe is the greatest quarterback ever. >> the guest host has been the chairman and ceo of starwood capital. we give him the last word when we return. tomorrow on "squawk box," earnings alert. dow component boeing set to report. we have analysts ready to break down the fourth quarter release. plus, employment numbers that could move the markets. we'll give private sector jobs numbers from adp. "squawk box" starts tomorrow at 6:00 a.m. eastern. [ man ] i've been out there most of my life.